Voluntary Administration

There are a number of reasons why a company can fall into financial hardship. Voluntary administration is a tool for companies in distress to use to help directors avoid insolvent trading, and potentially liquidation.

Tax Debt

We can help you avoid a tax debt, negotiate with the ATO on your behalf and offer support and negotiation with finance for tax debt loans. We provide all the necessary information on what to do if the ATO takes action against your company.

Director Advice

Revive Financial specialises in helping directors who need advice about their company. We can help you understand your duties, navigate the daunting area of liability and give you advice on the best options for the future of your company if you’re facing financial difficulties.

Turnaround & Restructuring

When it comes to the challenging economic climate in Australia, even the most sophisticated business can fall prey to volatile market conditions. By addressing insolvency issues early enough, there might be something you can do to turn it around.

Safe Harbour - Protection for Directors

Company directors taking steps to save their business without entering voluntary administration face two major risks: breach of their director duties, and personal liability for insolvent trading if their turnaround efforts aren’t successful.

However, since September 2017, if a director implements a plan to turnaround or restructure their business, they are now protected from these risks, and can avoid premature voluntary administration, under new ‘safe harbour’ law reforms.

Under the reforms, directors can now rely on a ‘safe harbour’ defence to avoid personal liability for a liquidator’s insolvent trading claim. Importantly, the defence is only available where a genuine turnaround attempt is being made and the company meets certain eligibility criteria.

Safe harbour protection commences as soon as you, as director, begin to develop one or more courses of action that are reasonably likely to lead to a better outcome for your company than the immediate appointment of a liquidator or administrator.

This is referred to as the ‘better outcome test’.

Accessing safe harbour protection

The required steps to access the safe harbour defence are:

Develop and implement a course of action for a genuine turnaround.

Satisfy the better outcome test at all times (see below).

Comply with the eligibility criteria at all times (see below).

Safe harbour protection ceases if you:

fail or cease to implement a course of action that has been developed,

cease to meet the better outcome test or safe harbour eligibility criteria, or

appoint a liquidator or administrator.

Satisfying the better outcome test

From the time a course of action is being developed, your company needs to continue to satisfy the better outcome test.

This means you believe the intended course of action is reasonably likely to lead to a better outcome for your company than immediately appointing an administrator or liquidator.

To work out whether this test is being satisfied, you must consider whether you are:

properly informing yourself of the financial position of the company,

taking appropriate steps to prevent misconduct by officers,

taking appropriate steps to ensure the company is keeping proper financial records,

seeking advice from an ‘appropriately qualified entity’, and

developing or implementing a plan for restructuring the company.

Our experts can talk you through your situation and provide detailed advice. Get in touch for a free consultation today.

Safe harbour eligibility criteria

In addition to undertaking a genuine turnaround plan, certain eligibility criteria must be met for the defence to be available:

Employee entitlements and superannuation must be paid.

ATO returns must be lodged on time.

Appropriately qualified entities

Limited guidance is available to assist directors to determine who is an ‘appropriately qualified entity’. It’s therefore up to you to assess the quality of an advisor which include:

What safe harbour does not cover?

Safe harbour does not do the following:

Avoid personal liability for directors under personal guarantees or an ATO director penalty notice if your turnaround is unsuccessful.

Provide a specific defence to criminal liability for insolvent trading or other types of liquidator claims, such as for breaching directors duties. However, directors causing their company to comply with the safe harbour eligibility criteria are also likely complying with their duties in circumstances where their company may be insolvent.

Provide a defence to an insolvent trading claim for debts incurred before safe harbour begins. If your company has traded while insolvent before implementation, you may be personally liable for those debts.

The right time to access safe harbour

Safe harbour doesn’t prevent other challenges your struggling business may face such as tight cashflow, lack of supplier support following non-payment, or legal action by creditors such as the Australian Taxation Office.

Seeking help early prevents problems becoming urgent and gives your business the best chance of survival. Waiting too long can mean your business has limited options or, worse still, becomes insolvent and no longer viable.

If you would like to further understand the risks of insolvent trading and how to access safe harbour, contact us for a free confidential discussion on 1800 861 247.

We provide financial debt help for thousands of people every year to get themselves and their businesses out of financial debt – so they can regain their peace of mind.